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1. Credit approved term sheet, 2-year term, 6.5%
ASX Announcement
27 April 2021
Damstra Technology
(ASX: DTC)
QUARTERLY ACTIVITIES REPORT
Q3 Revenue, up 66% on PCP
Damstra Holdings Limited (Damstra or the Company, ASX: DTC), is pleased to provide an update on the Company’s
operations for the third quarter of FY21 ended 31 March 2021 (Quarter).
Financial Highlights
• Strong quarterly performance revenue of $6.9m, up 66% on (PCP)
• Highest ever monthly revenue in March 2021
• ARR at 31 March of $33m, up by 98% on (PCP)
• Operating cash receipts of $7.2m for the Quarter
• Record Gross Margin: on a year to date (YTD) basis has now expanded to 81% from 67% (PCP)
• YTD EBITDA Margin of 20%, up from 15.3% (PCP)
• Improve financial flexibility with new $20m debt facility1
Other Highlights
• 30 new clients acquired during Q3, taking YTD new clients to 102
• The synergies target from the Vault acquisition of $5.2m has been further upgraded and is now finalised at $6m
• Active user numbers increased by 61% to 689,000 from 427,000 (PCP)
• Enterprise Protection Platform (EPP) positioning received positively by existing and potential clients
Key Financial and Operating Metrics
Metric Q3 2021 Q3 2020 Variance
Users (‘000) 689 427 61%
Clients 674 317 212%
Recurring revenue (%) 92% 92% flat
Gross Margin % (YTD) 81% 67% 14%
Client churn <1% <1% flat
Financial Review
Damstra delivered a strong operating performance in Q3 FY21, with revenue of $6.9m, up 66% on PCP. This revenue
outcome is coupled with operating cash receipts of $7.4 m for the quarter, up 33% on PCP.
Revenue for March 2021 was the highest monthly revenue ever recorded for Damstra and demonstrates the accelerated
growth occurring in the business.
Gross Margin continues to expand on a YTD basis, and is now at 81% YTD, reflecting continuing leverage from increased
scale. EBITDA Margin also increased on a YTD basis, and is now at 20%. This strong financial performance results from
the successful integration of Vault. Cost synergies of $6m are now fully implemented and run-rated in the Company’s
ongoing financial performance. This synergy result is also a further increase from the already improved $5.2m.
Importantly, this reinforces the successful integration of past acquisitions by the Company.
To provide Damstra the fullest financial flexibility for pursing its growth plans, Damstra has executed a credit approved
term sheet with Longreach Credit Investors for a new $20m debt facility. On finalisation of the debt facility, the present
Westpac facility will be extinguished.
For the first time, we are reporting Annualised Recurring Revenue (ARR), on which Damstra intends to report on an
ongoing basis. At the end of Q3 FY21, ARR stood at $33m, up 98% compared to PCP.
Damstra CEO, Christian Damstra, commented:
“We are extremely pleased to see record Q3 revenues with an increase of growth accelerating to a record 66% growth
level in the third quarter (versus PCP). We are now seeing a sustainable accelerating growth profile. This has been achieved
due to strong organic growth in the construction, mining, and aged care sectors, underpinned by the strong cross sell of
products to existing clients, in the workflow and mobility areas’’.
“The Vault integration is now complete, and we are pleased to report final realised synergies of $6m, which far outstrips
our original forecast of $4m. This has enabled Damstra to swiftly offset the financial impact of Vault’s previous operating
cash loss business profile, as demonstrated by Damstra’s positive operating cashflows, EBITDA and increasing Gross and
EBITDA margins”.
“Strategically, current, and prospective clients have responded extremely favourably to the launch of our new EPP
positioning, recognising how Damstra’s product suites have evolved to work not only individually but also, critically, how
they can orchestrate seamlessly into a fully unified offering. Large clients now have great confidence that we can deploy
Damstra’s EPP at an enterprise level rather than be seen as a single point solution”.
Business and Operational Review
Damstra is one of the first companies globally to successfully deliver a technology solution for enterprise-wide protection
and safety of organisations. The success of our solution is demonstrated by our expanding geographic footprint: Damstra
products are now used in the United Kingdom, Holland, Ghana, Antarctica, Hong Kong, Singapore, Philippines, and the
USA, to name a few.
In the United Kingdom, Damstra is on two trial sites with Skanska, being the M42 Roadway and the City of London, with
a final decision expected during Q4 FY21. In addition to our core offering, our workflow, paperless and mobility products
are now actively being trialled by Skanska.
The overall business performance was driven by increased users within existing clients and new clients acquired during
the quarter and the previous two quarters. Since December, the business has seen continued momentum, with new
users and an underlying trend of decreasing non-renewals (users are generally on a 12-month renewal cycle).
In FY21 YTD we have acquired 102 new clients, which results in new client growth of ~17% on a PCP YTD basis.
Our paperless forms module is now deeply integrated into the EPP. This offering allows our clients to increase the safety
and compliance of their organisations and increase the productivity of their worksites at a reduced cost. It has had
significant uptake across our enterprise customer base, particularly in mining and construction. Following a series of
successful pilots, Damstra Digital Forms are now being rolled out across these larger Damstra clients. Due to the
complexity of integration and the benefits to clients, this is now the Company’s highest priced product offering.
Strategically, we see this module of the EPP as a potential game changer. It paves the way for Damstra to extend our EPP
offering to organisational workflow management, assisting organisations in the digital transformation of their protection
and safety processes.
The Company’s partnership strategy continues to develop, with ~40 partners globally, targeting 12 different verticals.
Continued expansion of a scalable and profitable partner program is a key component in Damstra’s revenue growth
strategy. This has been built on a solid, sustainable platform designed to discover, develop, and execute significant
revenue opportunities across targeted industry verticals, via a group of carefully selected partners. The TechnologyOne
partnership continues to expand with 18 clients now onboarded and a significant pipeline of opportunities in place.
Damstra CEO, Christian Damstra, commented:
“The partner program has the potential to deliver significant and rapid revenue growth on top of revenue that is internally
generated by the direct sales team. The ability to provide a touchless sales cycle complements our internal resources and
efficiently allows our team to pursue other high value and complex opportunities. We are already achieving exceptional
success with an ARR growth rate generated from the partner team exceeding 300% this Fiscal Year to date and a sales
pipeline of qualified opportunities growing at a similar rate”.
Product and Technology Update
As part of our last Half Year results, we launched the Damstra Enterprise Protection Platform (EPP). With product
innovation being the key differentiator for Damstra, we continue to implement new products, modules, and features.
This now is under the umbrella of our EPP, a strategic pivot reflecting the breadth and depth of our rapidly expanding
offering.
The EPP protects clients from unnecessary and unforeseen business risks in the four largest investment areas in any
organisation, ensuring prepared people, safe workplaces, connected assets and accessible information.
Client feedback has been extremely encouraging and importantly has shifted conversations from single point solutions
to an integrated, enterprise-grade solution to manage, mitigate and reduce business risks. It will be important for our
clients to have the ability to clearly understand the enhancement and evolution of the EPP over the next 24-36 months.
This makes the Damstra solution a sustainable platform which will grow as the needs of our clients evolve.
In terms of some specific product initiatives during Q3, below are three of the more material initiatives:
• Damstra’s Satellite offering, which enables remote workers to have continuity of communication coverage, i.e.,
connectivity in places outside standard coverage areas via satellite. We have several clients who are scheduled
to go live in the upcoming period. Damstra is delighted to be trialling this offering with the Central Australian
Aboriginal Congress, to support their operations in remote locations.
• Damstra Safety launched as both a standalone and integrated tool to manage daily risk and compliance in mobile
environments, with business analytics at a central level. Restaurant Brands recently implemented this offering
at Taco Bell and KFC in California.
• Expansion of our mobility offering beyond Samsung wearable devices, to now include Apple and lower cost
Omate wearables. This will enable penetration into small to medium health care and industrial businesses.
Damstra has also established relationships with numerous global technology companies such as Oracle Innovation Hub,
North American Microsoft Manufacturing Vertical Customer Group, and the AWS Amazon Partner Program. Damstra is
working toward becoming a global leader in Enterprise Protection and is seeking alignment with organisations that have
an established market presence, to help mitigate the significant investment required to “go it alone” as an unknown
organisation in highly competitive and fragmented markets.
Outlook
Damstra is now forecasting for FY21, revenue of between $28.5 - $30.5m.
The Company is focused on executing its long-term growth strategy and continuing to develop its EPP platform, while
continuing client acquisition and converting opportunities in South East Asia and North America.
Investor Briefing
Damstra will host a virtual investor briefing today from 9:00am to 11:00am Australian Eastern Standard Time (AEST). To
join the investor briefing please register via the following link:
https://zoom.us/webinar/register/WN_bS0vwwhLSPqGFBqSRZvHWQ
*Unless otherwise specified, all amounts are provided in AUD and an unaudited basis and pro forma basis
Ends
Authorised for release to ASX by the Board of Damstra Holdings.
Enquiries
Investors Media Katja Voegele Ryan Thomson Damstra +61 411 628 839
Citadel-MAGNUS +61 423 151 378
About Damstra Damstra is a global leader in enterprise protection software. Its Enterprise Protection Platform (EPP) integrates an
extensive range of modules and products that allows organisations to mitigate and reduce unforeseen and unnecessary
business risks around people, workplaces, assets, and information.
Integral to the Damstra EPP, Damstra's Workforce Management, Learning Management and Connected Worker solutions
combine to ensure Protected People. In creating workplaces that are Safe, Damstra's Access Control, Digital Forms
and Safety Solutions are utilised. Assets are connected into operations, through integrated Asset Management enabling
Asset mobilisation and offerings in RFID and IOT. And lastly Accessible Information, Reporting BI tools and Predictive
Analytics are critical to ensuring customers are making the right decisions with the right information.
For more information, please visit:
https://www.damstratechnology.com
https://www.linkedin.com/company/damstra-technology
Forward-Looking Statements
This ASX release includes certain forward-looking statements that are based on information and assumptions known to
date and are subject to various risks and uncertainties. Forward-looking statements are based on:
• assumptions regarding the Company’s financial position, business strategies, plans and objectives of management
for future operations and development and the environment in which the Company will operate; and
• current views, expectations, and beliefs as at the date they are expressed, and which are subject to various risks and
uncertainties.
Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these
forward-looking statements. Such forward-looking statements are not guaranteeing of future performance and involve
known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Damstra. These
factors may cause actual results to differ materially from those expressed in the statements contained in this
announcement.
The Company disclaims any responsibility for the accuracy or completeness of any forward-looking statement. The
Company disclaims any responsibility to update or revise any forward-looking statements to reflect any change in the
Company’s financial condition, status or affairs or any change in the events, conditions, or circumstances on which a
statement is based, except as required by law. The projections or forecasts included in this announcement have not been
audited, examined, or otherwise reviewed by the independent auditors of the Company.
You must not place undue reliance on these forward-looking statements.
Appendix4C
QuarterlycashflowreportforentitiessubjecttoListingRule4.7B
Nameofentity
DamstraHoldingsLimited[DTC.ASX]
ABN Quarterended(“currentquarter”)
74610571607 31March2021
Consolidatedstatementofcashflows Currentquarter$A’000
Yeartodate(9months)$A’000
1. Cashflowsfromoperatingactivities
7,202 21,7001.1 Receiptsfromcustomers
1.2 Paymentsfor
(a) researchanddevelopment
(b) productmanufacturingandoperatingcosts
(2,004) (6,227)
(c) advertisingandmarketing (195) (423)
(d) leasedassets
(e) staffcosts (2,856) (9,024)
(f) administrationandcorporatecosts (2,522) (5,011)
1.3 Dividendsreceived(seenote3)
1.4 Interestreceived
1.5 Interestandothercostsoffinancepaid
1.6 Incometaxespaid
1.7 Governmentgrantsandtaxincentives - 1,373
1.8 Other(Stampduty) - (132)
1.9 Netcashfrom/(usedin)operatingactivities
(375) 2,256
2. Cashflowsfrominvestingactivities
2.1 Paymentstoacquire:
(a) entities
(b) businesses
(c) property,plant,andequipment (849) (2,323)
(d) investments
(e) intellectualproperty (1,502) (3,753)
Consolidatedstatementofcashflows Currentquarter$A’000
Yeartodate(9months)$A’000
(f) othernon-currentassets
2.2 Proceedsfromdisposalof:
(g) entities
(h) businesses
(i) property,plant,andequipment
(j) investments
(k) intellectualproperty
(l) othernon-currentassets
2.3 Cashflowsfromloanstootherentities
2.4 Dividendsreceived(seenote3)
2.5 Other(contingentconsiderationrelatingtoprioryearacquisition)
2.6 Netcashfrom/(usedin)investingactivities
(2,351) (6,076)
3. Cashflowsfromfinancingactivities
3.1 Proceedsfromissuesofequitysecurities
(excludingconvertibledebtsecurities)
3.2 Proceedsfromissueofconvertibledebtsecurities
3.3 Proceedsfromexerciseofoptions - 390
3.4 Transactioncostsrelatedtoissuesofequitysecuritiesorconvertibledebtsecurities
- (359)
3.5 Proceedsfromborrowings 429 1,421
3.6 Repaymentofborrowings
3.7 Transactioncostsrelatedtoloansandborrowings
3.8 Dividendspaid
3.9 Other(providedetailsifmaterial)• Leasedassets• Interestreceived• Interestandothercostsoffinance
paid
(816)27
(101)
(2,388)
64(309)
3.10 Netcashfrom/(usedin)financingactivities
(461) (1,181)
Consolidatedstatementofcashflows Currentquarter$A’000
Yeartodate(9months)$A’000
4. Net increase/(decrease) incashandcashequivalentsfortheperiod
7,551 9,3654.1 Cashandcashequivalentsatbeginning
ofperiod
4.2 Netcashfrom/(usedin)operatingactivities(item1.9above)
(375) 2,256
4.3 Netcashfrom/(usedin)investingactivities(item2.6above)
(2,351) (6,076)
4.4 Netcashfrom/(usedin)financingactivities(item3.10above)
(461) (1,181)
4.5 Effectofmovementinexchangeratesoncashheld
4.6 Cashandcashequivalentsatendofperiod
4,364 4,364
5. Reconciliation of cash and cashequivalentsattheendofthequarter(asshownintheconsolidatedstatementofcash flows) totherelateditemsintheaccounts
Currentquarter$A’000
Previousquarter$A’000
5.1 Bankbalances 4,364 7,551
5.2 Calldeposits
5.3 Bankoverdrafts
5.4 Other(providedetails)
5.5 Cashandcashequivalentsatendofquarter(shouldequalitem4.6above)
4,364 7,551
6. Paymentstorelatedpartiesoftheentityandtheirassociates Currentquarter$A'000
6.1 Aggregateamountofpaymentstorelatedpartiesandtheirassociatesincludedinitem1
454
6.2 Aggregateamountofpaymentstorelatedpartiesandtheirassociatesincludedinitem2
6.1aboveiscomprisedofdirectorfeesandexpensespaidto6directorsfortheperiod1January–31March2021
7. Financing facilitiesNote:theterm“facility’ includesall formsoffinancingarrangementsavailabletotheentity.Add notes as necessary for anunderstanding of the sources of financeavailabletotheentity.
Totalfacilityamountatquarter
end$A’000
Amountdrawnatquarterend$A’000
7.1 Loanfacilities
7.2 Creditstandbyarrangements
7.3 Other(pleasespecify)- Merchantprepayment- Assetfinance- Bankguarantees
510
9,000746
-
4,446500
7.4 Totalfinancingfacilities 10,246 4,946
7.5 Unusedfinancingfacilitiesavailableatquarterend 5,300
7.6 Includeintheboxbelowadescriptionofeachfacilityabove,includingthelender,interestrate,maturitydateandwhetheritissecuredorunsecured.Ifanyadditionalfinancingfacilitieshavebeenenteredintoorareproposedtobeenteredintoafterquarterend,includeanoteprovidingdetailsofthosefacilitiesaswell.
•Facility1:$9mRevolvingLeasingFacilitywithprincipalandinterestrepayments(“LeasingFacility”);and•Facility2:$0.7mBankGuaranteeFacilitywitha2.5%p.a.feechargedsemi-annually;•Facility3:$0.5mMerchantPrepaymentFacilitywithnofixedrepaymenttermsorinterest
8. Estimatedcashavailableforfutureoperatingactivities $A’000
8.1 Netcashfrom/(usedin)operatingactivities(Item1.9) (375)
8.2 Cashandcashequivalentsatquarterend(Item4.6) 4,364
8.3 Unusedfinancefacilitiesavailableatquarterend(Item7.5) 5,300
8.4 Totalavailablefunding(Item8.2+Item8.3) 9,664
8.5 Estimatedquartersoffundingavailable(Item8.4dividedbyItem8.1)
25
8.6 IfItem8.5islessthan2quarters,pleaseprovideanswerstothefollowingquestions:
1. Doestheentityexpectthatitwillcontinuetohavethecurrentlevelofnetoperatingcashflowsforthetimebeingand,ifnot,whynot?
Answer:N/A
2. Hastheentitytakenanysteps,ordoesitproposetotakeanysteps,toraisefurthercashtofunditsoperationsand,ifso,whatarethosestepsandhowlikelydoesitbelievethattheywillbesuccessful?
Answer:N/A
3. Doestheentityexpecttobeabletocontinueitsoperationsandtomeetitsbusinessobjectivesand,ifso,onwhatbasis?
Answer:N/A
Compliancestatement1 This statementhasbeenprepared inaccordancewithaccountingstandardsandpolicieswhich
complywithListingRule19.11A.2 Thisstatementgivesatrueandfairviewofthemattersdisclosed.Date: 27April2021
Authorisedby: TheBoard (nameofbodyorofficerauthorisingrelease–seenote4)
Notes1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the
marketabouttheentity’sactivitiesforthepastquarter,howtheyhavebeenfinancedandtheeffectthishashad on its cash position. An entity that wishes to disclose additional information over and above theminimumrequiredundertheListingRulesisencouragedtodoso.
2. IfthisquarterlycashflowreporthasbeenpreparedinaccordancewithAustralianAccountingStandards,thedefinitionsin,andprovisionsof,AASB107:StatementofCashFlowsapplytothisreport.IfthisquarterlycashflowreporthasbeenpreparedinaccordancewithotheraccountingstandardsagreedbyASXpursuanttoListingRule19.11A,thecorrespondingequivalentstandardappliestothisreport.
3. Dividends received may be classified either as cash flows from operating activities or cash flows frominvestingactivities,dependingontheaccountingpolicyoftheentity.
4. Ifthisreporthasbeenauthorisedforreleasetothemarketbyyourboardofdirectors,youcaninserthere:“Bytheboard”.Ifithasbeenauthorisedforreleasetothemarketbyacommitteeofyourboardofdirectors,you can insert here: “By the [name of board committee – eg Audit and Risk Committee]”. If it has beenauthorised for release to themarket by a disclosure committee, you can insert here: “By theDisclosureCommittee”.
5. Ifthisreporthasbeenauthorisedforreleasetothemarketbyyourboardofdirectorsandyouwishtoholdyourselfoutascomplyingwithrecommendation4.2oftheASXCorporateGovernanceCouncil’sCorporateGovernancePrinciplesandRecommendations,theboardshouldhavereceivedadeclarationfromitsCEOandCFOthat,intheiropinion,thefinancialrecordsoftheentityhavebeenproperlymaintained,thatthisreportcomplieswiththeappropriateaccountingstandardsandgivesatrueandfairviewofthecashflowsoftheentity,andthattheiropinionhasbeenformedonthebasisofasoundsystemofriskmanagementandinternalcontrolwhichisoperatingeffectively.
